CASE NO.

114
Republic Planters Bank vs. Sarmiento
537 SCRA 303, G.R. No. 170785 October 19, 2007
CASE DOCTRINE:
The blanket mortgage clause, also known as a dragnet clause, is one that is specifically phrased to
subsume all debts of past or future origins; Mortgages of this character enable the parties to provide
continuous dealings, the nature or extent of which may not be known or anticipated at the time, and
they avoid the expense and inconvenience of executing a new security on each new transaction.

FACTS:

Respondents executed a promissory note obligating themselves to pay Maybank, then known as
Republic Planters Bank, the amount of P80,000.00. The respondents executed the Real Estate Mortgage
over two parcels of land. A year after, the respondent executed a promissory which he undertook to pay
the amount of P100,000.00 an in the same month, all four respondents executed an amendment to the
real estate mortgage changing the consideration of the mortgage from P80,000.00 to P100,000.00 but
adopting all the terms and conditions of the previous mortgage as integral parts of the later one.

Vivencio was the owner of V. Sarmiento Rattan Furniture, a sole proprietorship engaged in export
business in which he incurred loan obligations from Maybank. The respondents executed a Suretyship
Agreement, whereby they agreed to be solidarily liable with V. Sarmiento Rattan Furniture for the
payment of P100,000.00 plus all obligations which the latter incurred or would incur from Maybank.

However, the respondents failed to pay the said amount resulting the property to be foreclosed. Maricel
Sarmiento purchased a manager’s check from Maybank in the amount of P300,000.00 on and Jesusa
deposited the amount of P12,000.00. Maybank did not grant respondents’ request for certificate of
redemption releasing the foreclosed property

Maybank consolidated its ownership over the foreclosed property. Maybank and Philmay executed a
deed of absolute sale, transferring ownership of the foreclosed property to the latter. On 15 July 1998,
Philmay sold the same to Fabra.

The RTC ruled in favor of the respondents revoking and rescinding the tranfered title executed by the
Planters Bank and Philmay.

ISSUE:

Whether the deposits made by respondents constituted a valid tender of the redemption price.

RULING:

The crux of the controversy pertains not to the amount of redemption price tendered by respondents
but rather to the sufficiency of the amount tendered that would warrant the redemption of the
foreclosed property. The determination of whether the amount tendered by respondents was enough
to redeem the foreclosed property calls for the ascertainment of the liabilities covered and secured by
the mortgage based on the text of the mortgage deed.

A blanket mortgage clause, also known as a dragnet clause in American jurisprudence, is one that is
specifically phrased to subsume all debts of past or future origins. Such clauses are carefully scrutinized
and strictly construed. Mortgages of this character enable the parties to provide continuous dealings,
the nature or extent of which may not be known or anticipated at the time, and they avoid the expense
and inconvenience of executing a new security on each new transaction.

At the time of the foreclosure sale of the mortgaged property, the outstanding obligation arising from
the export bills transactions had already amounted to more than P1 million. In accordance with General
Banking Act redemption may only be made by paying the amount due under the mortgage deed within
one year from the sale of the property. Since respondents failed to satisfy the full amount of the
indebtedness to Maybank, the latter was justified in refusing to grant respondents’ demand for
redemption of the foreclosed property.